The New Nation - Internet Edition

International donors have agreed to provide US$1.3 billion in emergency food financing for Bangladesh in one of the clearest indications that soaring food prices are threatening livelihoods in poorest countries.

The funding package, which includes contributions from the Asian Development Bank and the World Bank, is also a recognition of the particular difficulties of Bangladesh. Two spells of flooding and a devastating cyclone last year destroyed at least 2 million tonnes of rice, forcing the country to import large quantities of its main staple.

A sharp rise in food prices has left the 40 per cent of its 150million population who live on less than a dollar a day struggling to feed themselves. Overall, official annual food price inflation is running at 12 per cent and rice prices have risen more than 60 per cent compared with last year.

David Fernandez, an Asia economist at JPMorgan, said: "If you are looking for a symbol of how higher food prices are now really hurting poorer countries, then Bangladesh is it."

The surge in rice prices has been fuelled in the past year by export restrictions imposed by producers concerned at domestic shortages. Vietnam announced on Monday that it would introduce its first tax on grain shipments and fertiliser, while the country struggles with an annual inflation rate of 26.8 per cent. Vietnam, which blocked the signing of rice export contracts between April and June, was the world's third biggest exporter of rice last year.

The situation in Bangladesh will be reviewed at an international conference in London in September, which will look at extending assistance to cope with the impact of climate change and maintain food security. Bangladesh, as a river delta, is losing about 2 per cent of its agricultural land a year to river erosion.